Industry News

Tensions continue to rise in the East as Japan has promised Vietnam ships and equipment to strengthen its forces in the South China Sea. Japan, Vietnam, Malaysia, Brunei, Taiwan and the Philippines are currently locked in a bitter dispute with China over what they view as Chinese over-aggressiveness in the region.

Japanese Prime Minister Shinzo Abe announced that it will supply Vietnam with used vessels as well as a donation of $1.7 billion. While not mentioning China by name, Abe cited stability-threatening, large-scale land reclamation projects and the building of outposts as the primary motivators for the donations.

The number of ships Japan will provide wasn’t announced, but last year it promised six used ships to Vietnam. Two of the vessels have been delivered, and Vietnam expects to take delivery of the remaining four before 2016.

China conducted several reclamation projects in the South China Sea earlier this year, and in early August Japan released 14 photos pinpointing 16 offshore platforms located in disputed territories in the East China Sea.

Beijing has downplayed the concerns of its littoral neighbors, asserting that the majority of the new facilities will be used for drilling, processing and storing natural gases, but Japan contends the structures can easily be fashioned with air defense radar systems and heliports.

China announced that it had ceased its offshore reclamation projects in the South China Sea shortly after Japan released the photos of the offshore platforms. However, China’s statements did not quell regional unease as many believed that Beijing only halted its projects because it had completed construction of the platforms.

China currently claims sovereignty over most of the South China Sea, parts of which are also claimed by the Philippines, Brunei, Malaysia, Taiwan and Vietnam.

Venezuelan authorities arrested seven people suspected of smuggling diesel aboard a tanker owned by state-owned oil company PDVSA last week. The tanker was authorized to load just 10,000 barrels of diesel fuel at Venezuela’s Cardon refinery but was discovered with 60,000 barrels.

The discovery was made in the late hours of September 7, and authorities believe the suspects intended to resell the fuel overseas.

Venezuelan smugglers are currently enjoying a thriving black market. According to reports, a tank of gasoline can be purchased for less than the equivalent of one cent. Government officials estimate that this has cost the Venezuelan government up to $12 billion in revenue.

In January, Venezuelan authorities arrested an oil ministry official charged with overseeing the domestic fuel market for alleged irregularities associated with gasoline distribution.

South Korea’s Big Three shipbuilders are not likely to return to the black until 2017 at the earliest, according to an industry analyst.
The double blow of overcapacity in shipbuilding and the collapse in oil prices are blamed.
In a report, NH Investment Securities analyst Yoo Jae-Hoon argues that

South Africa has dealt with chronic energy issues over the years but appears poised to solve them with its first LNG import terminal. The $1.4 billion facility would be located at the west coast port of Saldanha Bay, which is South Africa’s deepest natural port and an emerging oil and gas hub.

Shell, Mitsubishi and Sasol, the South African energy giant based in Johannesburg, are expected to be among the companies placing bids for the 3,126 MW gas-to-power project in 2016’s first quarter. If the plan comes to fruition, South Africa will look into the possibility of using so-called power barges or power ships, vessels modified for power generation, as well as gas-fired power plants to generate electricity.

South Africa’s ultimate aim is to diversify its resources away from coal and bring an end to power outages.

South Africa currently uses rolling power outages to deal with its energy shortages. The strategy is known as “load shedding,” and its objective is to ease the pressure on the power grid to prevent its collapse. Load shedding is implemented whenever there is a discrepancy between energy supply and demand.

In the Panama Canal expansion project’s latest hiccup, the Panama Canal Authority (ACP) announced that it was not satisfied with contractor Grupos Unidos por el Canal’s (GUPC) response to the leaks in the Pacific Cocoli locks.

“The contractor has sent two letters outlining the possible causes of the issue. However, it does not provide accurate information about the cause of this seepage,” ACP said in a statement. ”From the moment the failure was detected, the ACP requested GUPC to submit in writing a comprehensive and detailed diagnosis and cause, as well as a proposed solution and estimated time for correction, among other key elements. The most recent formal communications made by GUPC do not answer the questions raised.”

From cost overruns to labor strife, the expansion project has dealt with a string of setbacks that have delayed the canal’s original projected 2014 inauguration, which would have coincided with the original canal’s 100-year anniversary.

Filling of the locks began on June 22, and the ACP announced in late August that the canal had sprung a leak. ACP and GUPC officials met on August 22 to discuss the steps that would be taken to repair the crack. ACP released a statement in late August stating that it did not expect the leak to delay the canal’s April 2016 opening but backtracked in a September 7 statement, which said that it very well could.

Panama hopes the $5 billion expansion will stimulate its economy by increasing trade flows to and from the U.S. East and Gulf Coasts as well as Latin America. Upon completion, vessels up to 12,000 TEUs will be able to transit the canal.

As the third anniversary of the entry into force of the Maritime Labour Convention 2006 (MLC) approaches, Seafarers’ Rights International (SRI) is embarking on a comprehensive study on the effectiveness of the Convention. The study has been commissioned by the International Transport Workers’ Federation. It will be an in-depth and... Read more →